2.

Look up the numerical value for the following factors from the interest tables.
1. ( P/F,6%,8)

2. ( A/P,10%,10)

PV

0.6274

AV

0.16275

i
n
F
P

6%
8
1
0.6274123713

i
n
P
A

10%
10
1
0.1627453949

2.3

A manufacturer of off-road vehicles is considering the purchase of dual-axis inclinometers for in

distributor of the inclinometers is temporarily overstocked and is offering them at a 40% discou
purchaser gets them now instead of 2 years from now, which is when they will be needed, wha
unit? The company would pay the regular price, if purchased in 2 years. Assume the interest ra
Reg. Cost
< 2 years

2.5

$
$

142.00
85.20

i
n
F
P

$
$

10%
2
142.00
117.36

A family that won a $100,000 prize on Americas Funniest Home Videos decided to put one-hal
their child who was responsible for the prize. If the fund earned interest at 6% per year, how m
was started?
Prize
Save

$
$

100,000.00
50,000.00

i
n
P
F/P

$
$

6%
14
50,000.00
113,045.20

2.7

A company that sells high-purity laboratory chemicals is considering investing in new equipme
better matching the size of the products to be shipped to the size of the shipping container. If t
purchase and install, how much must the company save each year for 3 years in order to justify
10% per year?
Cost

220,000.00

i
n
P
A/P

10%
3
220,000.00
$88,465.26

2.9

If GHD Plastics purchases a new building now for $1.3 million for its corporate headquarters, wh
years? The company expects all expenditures to earn a rate of return of at least 18% per year.
Cost

1,300,000.00

i
n
P
F/P

18%
10
$ 1,300,000.00
$6,803,986.22

2.11

Five years ago a consulting engineer purchased a building for company offices constructed of b
result, some of the bricks were deteriorated from their exposure to rain and snow. Because of t
price of the building was 25% below the price of comparable, structurally sound buildings. The
and arrested further deterioration by applying an extra-strength solvent-based RTV elastomeric
building to its fair market value. If the depressed purchase price of the building was $600,000 a
$25,000, what is the equivalent value of the forced appreciation today, if the interest rate is 8
Depress
Cost
Repair
Present

$
$
$
$

600,000.00
800,000.00
25,000.00
175,000.00

i
n
P
F/P

$
$

8%
5
175,000.00
257,132.41

2.13

Syringe pumps often fail because reagents adhere to the ceramic piston and deteriorate the se
integrated polymer dynamic seal that provides a higher sealing force on the sealing lip, resultin
customers expects to reduce downtime by 30% as a result of the new seal design. If lost produ
$110,000 per year for the next 4 years, how much could the company afford to spend now on t
of 12% per year?
Cost
Expect

2.15

$
$

110,000.00
33,000.00

i
n
A
P/A

$
$

12%
4
33,000.00
100,232.53

The Public Service Board (PSB) awarded two contracts worth a combined $1.07 million to impro
reconstruct the spillway that was severely damaged in a flood 2 years ago. The PSB said that, b
came in $950,000 lower than engineers expected. If the projects are assumed to have a 20-yea
savings at an interest rate of 6% per year?

Save

950,000.00

i
n
P

6%
20
950,000.00

A/P

82,825.33

2.17

In an effort to reduce childhood obesity by reducing the consumption of sugared beverages, so

and other soft drinks. A survey by Roland Sturm of 7300 fi fth-graders revealed that if taxes ave
soda, no real difference in overall consumption was noticed. However, if taxes were increased t
calculated they would make a significant difference. For a student who consumes 100 sodas pe
extra cost from 4 cents to 18 cents per soda? Assume the student consumes sodas from grade
an interest rate of 6% per year.
Extra Cost

14.00

i
n
A
F/A

6%
8
14.00
$138.56

2.19

Henry Mueller Supply Co. sells tamperproof, normally open thermostats (i.e., thermostat closes
flows are shown in the table below. Determine the future worth of the net cash flows at an inter
CF

110.00

i
n
A
F/A

10%
8
110.00
$1,257.95

2.21 Find the numerical value of the following factors using (a) interpolation and (b) the formula.
1. (A/P,13%,15)

2. (P/G,27%,10)

a. Interpolation
i1
i2
n
P
A1
A2
x
A/P,13%,15

12%
14%
15
1
0.1468242396
0.162808963
0.0079923617
0.1548166013

a. Interpolation
i1
i2
n

b. Formula
A/P,13%,15

0.1547417797

26%
28%
10

P1
P2
x
P/G,27%,10

9.5126996408
8.6495852046
0.4315572181
9.0811424227

b. Formula
P/G,27%,10

9.0675920775

2.23 For the factor (F/P,10%,43), find the percent difference between the interpolated and formula c
formula-calculated value is the correct one.

Interpolated
i1
i2
n
P
F1
F2
x
F/P,10%,43
2.25

Formula

9%
11%
43
1
40.6761098431
88.897201154
24.1105456555
64.7866554986

i
F/P,10%,43
Difference
Percentage

10%
60.2400691612
4.5465863373
7.55%

Profits from recycling paper, cardboard, aluminum, and glass at a liberal arts college have incre
each of the last 3 years. If this years profit (end of year 1) is expected to be $6000 and the pro
a. Profit at the end of year 5
Profit/y
$
1,100.00
Pro1
$
6,000.00
Pro5
$
10,400.00

b. Present worth the profit

i
8%
n
5
P/G,8%,5
7.3724256489
P/A,8%,5
3.9927100371
P
$
32,065.93

2.27

Rolled ball screws are suitable for high-precision applications such as water jet cutting. Their to
because of increased productivity, as shown in the table. Determine the equivalent annual cost
Year
1
2
3
4
C * $1000
200
195
190
185
G
AA

$
$

5.00
200.00

i
n
P/G,8%,8
A/P,8%,8
A/G,8%,8

8%
8
17.8060983464
0.1740147606
$
15.49

2.29 GKX Industries expects sales of its hydraulic seals (in inch and metric sizes) to increase accordi
4k , where k is in years and cash flow is in $1000.
a. Amount of CF
CF3
$

82,000.00

b. Future worth in year 10

G
$
4,000.00
CF1
$
74,000.00
i
10%
n
10
P/G,10%,10
22.8913421141
P/A,10%,10
$6.14
P
$
546,263.33

2.31

Apple Computer wants to have $2.1 billion available 5 years from now to finance production of
based on your behavior, will learn how to control nearly all the electronic devices in your home
and sprinkler system. The company expects to set aside uniformly increasing amounts of mone
amount set aside at the end of year 1 is $50 million, how much will the constant increase G hav
investment account grows at a rate of 18% per year.
CF1

50.00

i
n
F
P/F,18%,5

$
$

P/A,18%,5
P/G,18%,5

18%
5
2,100.00
917.93
$156.36
5.2312496655

2.33

There are no tables in the back of your book for the geometric gradient series factors. Calculate
values, that is, A values for n=1 and 2, that would be in a 10% interest table for a growth rate o
i
n1
n2
G

10%
1
2
4%

PG1
A/P,10%,1
A1

0.9090909091
1.1
1

2.35

Determine the difference in the present worth values of the following two commodity contracts
Contract 1 has a cost of $10,000 in year 1; costs will escalate at a rate of 4% per year for 10 ye
year 1, but costs will escalate at 6% per year for 11 years.
i
n1
g
A
PG1

$
$

8%
10
4%
10,000.00
78,590.12

i
n2
g
A
PG1

$
$

8%
11
6%
10,000.00
92,926.14

2.37 Determine the present worth of a maintenance contract that has a cost of $30,000 in year 1 an
10 years. Use an interest rate of 6% per year.
i
n
g
A

6%
10
6%
30,000.00

PG

283,018.87

P/A,6%,6%,10

9.4339622642

2.39 If the value of Janes retirement portfolio increased from $170,000 to $813,000 over a 15-year
account over that period, what annual rate of return did she make?
P
n
F

$
$

(170,000.00)
15
813,000.00

RATE

11%

2.41

During a period when the real estate market in Phoenix, Arizona, was undergoing a significant
made anagreement with a distressed seller to purchase an office building under the following t
down payment of $200,000 now and no payments for 4 years, after which the remaining balan
able to make this deal because of poor market conditions at the time of purchase, and, at the s
in 4 years (when market conditions would probably be better) and move to a larger office build
able to sell the building in exactly 4 years for $1.9 million, what rate of return per year did the
n
P
F
2.43

$
$

4
(200,000.00)
900,000.00

RATE

45.65%

Bessimer Electronics manufactures addressable actuators in one of its Maquiladora plants in Me

investing $24,000 each year in years 1, 2, and 3, it will avoid spending $87,360 in year 3. If the
investments, what rate of return will it realize?
n
A
F

$
$

3
24,000.00
87,360.00

F/A,I,15
3.640
Berdasarkan tabel interest 3 tahun, 3,64 ter

2.45

Acme Bricks, a masonry products company, wants to have $600,000 on hand before it invests i
equipment. If the company sets aside $80,000 per year in an account that increases in value a
years will it be before Acme can purchase the equipment?
A
F
i
2.47

$
$

80,000.00
600,000.00
15%

F/A,15%,n

7.5

Berdasarkan tabel interest 15%, 7,5 terletak

You own a small engineering consulting company. If you invest $200,000 of the companys mon
expected to provide income of $29,000 per year, how long must the well produce at that rate in
rate of return of 10% per year?
A

29,000.00

P/A,10%,n

6.8965517241

P
i

200,000.00
10%

Berdasarkan tabel interest 10%, 6,89 terleta

2.49

A mechanical engineering graduate who wanted to have his own business borrowed $350,000
Because he was family, his father charged interest at only 4% per year. If the engineer was abl
$36,700 in year 2, and amounts increasing by $21,700 each year, how many years did it take f
i
A1
A2
G
P

$
$
$
$

4%
15,000.00
36,700.00
21,700.00
350,000.00

PA1
PA2
PA3
PA4
PA5
PA6

$14,423.08
$28,291.42
$41,626.37
$54,448.43
$66,777.33
$78,632.05

Trial and error didapa

2.51

In cleaning out some files that were left behind by the engineer who preceded you in your curre
had a calculation for the present worth of certain maintenance costs for state highways. The re
(with cost in $1 million):
12{1 -[(1+0.03)/(1+ 0.06)]^x}(0.06-0.03) = 140
0.65
-0.1870866434
x

=
=
=

0,9717^x
x*log(0,97)
15

2.53 You are told that the present worth of an increasing geometric gradient is $88,146. If the cash fl
gradient increase is 18% per year, what is the value of n ? The interest rate is 10% per year.
G

88,146.00

PG

CF1

25,000.00

88146

18%

-0.2820672

10%

1.2821

log 1.2821
n

=
=

3. ( A/G,15%,20)
A/G

4. ( A/F,2%,30)

5.3651

i
n
P
A/P
P/G

AV

15%
20
1
0.1597614704
33.5821726328

0.02465

i
n
F
A

2%
30
1
0.02465

xis inclinometers for installation in a new line of tractors. The

them at a 40% discount from the regular cost of $142. If the
y will be needed, what is the present worth of the savings per
ssume the interest rate is 10% per year.
$

PV

32.16
0

P=
117.36

ecided to put one-half of the money in a college fund for

t 6% per year, how much was in the account 14 years after it

FV

113,045.20
1

P=
50,000

sting in new equipment that will reduce cardboard costs by

hipping container. If the new equipment will cost $220,000 to
years in order to justify the investment, if the interest rate is

P=
220000
0

AW

$88,465.26
A=
88,465.26

rate headquarters, what must the building be worth in 10

t least 18% per year.
FV

$6,803,986.22

P=
1300000

ffices constructed of bricks that were not properly fired. As a

nd snow. Because of the problem with the bricks, the selling
sound buildings. The engineer repaired the damaged bricks
based RTV elastomeric sealant. This resulted in restoring the
ilding was $600,000 and the cost of getting it repaired was
if the interest rate is 8% per year?
FV

P = 175,000

257,132.41

and deteriorate the seal. Trident Chemical developed an

he sealing lip, resulting in extended seal life. One of Tridents
al design. If lost production would have cost the company
ord to spend now on the new seals, if it uses an interest rate

PV

A = 33,000

100,232.53

P = 100,232.53

$1.07 million to improve (i.e., deepen) a retention basin and

o. The PSB said that, because of the weak economy, the bids
med to have a 20-year life, what is the annual worth of the

P = 950,000
0

AW

$82,825.33

ugared beverages, some states have imposed taxes on soda

ealed that if taxes averaged 4 cents on each dollars worth of
axes were increased to 18 cents on the dollar, Sturm
nsumes 100 sodas per year, what is the future worth of the
mes sodas from grade 5 through graduation in grade 12. Use
0
FV

138.56
A =4

.e., thermostat closes as temperature rises). Annual cash

cash flows at an interest rate of 10% per year.
FV

A =110,000

1,257.95

nd (b) the formula.

polated and formula calculated values, assuming the

arts college have increased at a constant rate of $1100 in

be $6000 and the profit trend continues through year 5

A =6000

er jet cutting. Their total manufacturing cost is expected to decrease

equivalent annual cost at an interest rate of 8% per year.
5
6
7
8
180
175
170
165
A

184.51

s) to increase according to the cash flow sequence $70 +

FV

$1,416,866.40
A =74,000

finance production of a handheld electronic brain that,

devices in your home, such as the thermostat, coffee pot, TV,
sing amounts of money each year to meet its goal. If the
onstant increase G have to be each year? Assume the

G*PG
G
G

$
$
$

761.57
145.58
145,581,046.93

G =14,557,845
0

A = 50 milion
1

eries factors. Calculate the first two annual worth factor

ble for a growth rate of 4% per year.
PG2
A/P,10%,2
A2

1.7685950413
0.5761904762
1.019047619

commodity contracts at an interest rate of 8% per year.

4% per year for 10 years. Contract 2 has the same cost in

Difference

14,336.02

f $30,000 in year 1 and annual increases of 6% per year for

A = 30,000
0

3,000 over a 15-year period, with no deposits made to the

i = 11 %
0

P = 170,000

ergoing a significant downturn, CSM Consulting Engineers

under the following terms: total price of $1.2 million with a
h the remaining balance of $1 million would be paid. CSM was
urchase, and, at the same time, planning to sell the building
o a larger office building in Scottsdale, Arizona. If CSM was
turn per year did the company make onthe investment?

quiladora plants in Mexico. The company believes that by

87,360 in year 3. If the company does make the annual

1
P = 200,000

A = 24,000
0

est 3 tahun, 3,64 terletak pada tabel interest 20%

i = 20%

and before it invests in new conveyors, trucks, and other

t increases in value at a rate of 15% per year, how many
0

A = 80,000
1
2

est 15%, 7,5 terletak pada n = 5,4 tahun

of the companys money in a natural gas well that is

produce at that rate in order to get the money back plus a

est 10%, 6,89 terletak pada n = 12,3 tahun

P = 200,000

s borrowed $350,000 from his father as start-up money.

the engineer was able to pay his father $15,000 in year 1,
any years did it take for the engineer to repay the loan?
PG1
PG2
PG3
PG4
PG5
PG6

$
$
$
$
$

0
20,062.87
58,645.31
114,293.06
185,636.34
271,385.46

$14,423.08
$48,354.29
$100,271.68
$168,741.49
$252,413.67
$350,017.52

P = 350,000
1

A = 29,000

Trial and error didapatkan n6 tahun

eded you in your current job, you found an old report that
tate highways. The report contained the following equation

}(0.06-0.03) = 140

2
A = 12,000,000

P = 140,000,000

g= 6 %

$88,146. If the cash flow in year 1 is $25,000 and the

te is 10% per year.
25000{1 - [(1 + 0.18)/(1 + 0.1)]n}/(0.10-0.18)
A = 25,000

25000{1 - [(1.07272)]n}/(0.08)
1 - [(1.07272)]n
[(1.07272)]n
n log (1.07272)
3.54

0
P = 88,146

5. ( P/G,35%,15)
P/G

7.5974

i
n
F

35%
15
1

F = 142

F = 113,045.20
4

A=
88,465.26

10

11

12

13

14

F = 6,803,986.22
4

10

5
F=
257,132.41

A = 33,000

17

0,232.53

50,000
2

A=
82,825.33

18

19

20

A=
82,825.33

F = 39.59

A =4

F = 1,257,947.69

A =110,000

A =18

1
7

F = 178.15

PT =1100

G =1100

A =6000

A =200
1

G =5
6

AT = 184.51

PT = 546,265.60
A =74,000

F = 1,416,872.28

10

G =14,557,845

PT = 917,929,354.08
F = 2,100,000,000

g=6 %
2

P = $283,018.87
8

9 0

1
10

F= $283,018.87

i = 11 %
2

13

14

15

1,900,000

3
1,000,000

A = 24,000
2

i = 20%

F = 600,000

80,000
2

A = 29,000

11

12

11

12

12,3

14

15

0,000
4

A = 29,000
G = 21,700

13

A = 12,000,000
g= 6 %

g= 10 %

3.54

F = 178.15